David and Goliath
While the battle between online vs. brick-and-mortar has captured the world’s headlines, the reality is not as dramatic. A recent survey of the 250 largest worldwide retailers, revealed that growth reduced from 9.1% in 2006 to 4.8% in 2016. This is not a fall but a rather soft landing.
Yet, major retailers are seeking new ways to stay relevant and to capture the millennial consumer. Those who don’t, face an uncertain future and possibly bankruptcy as USA-behemoths Sears, Toys’r’us, Gymboree, JCPenney and more recently J.Crew and Payless ShoeSource found out. In fact, over 16 USA retailers - an all-time high, filed for bankruptcy or announced liquidations in 2018.
In Australia, Napoleon Perdis (beauty), Roger David (menswear), Laura Ashley Australia (womenswear) and Crabtree & Evelyn Australia (skincare) followed a similar path to bankruptcy in 2018.
The key to retail store longevity is digitisation, whether through innovative content rich mobile apps, virtual fitting rooms, or cashierless shopping. Many retailers have installed kiosks to supplement in-store customer service, and some have equipped their sales associates with mobile devices to check inventory and process customer payments on the spot.
Digital interactions influence 56 cents of every dollar spent in physical outlets
All of these initiatives hold the promise of keeping retail brands relevant and paying dividends, as customers who are digitally connected to a brand and shop in their stores are likely to buy more than double that of their non-digital peers.
But customers are becoming more demanding
Finally, a bitter pill to swallow is the disconnect between retail executives’ beliefs and the reality of Net Promoter Scores (NPS). Retailers’ NPS is on average only a fraction - 25% to be exact, of what their executives believe, and even lower for younger customers.
In an era of ‘digital disruption’, established retailers worldwide are looking at technology to enhance their existing business processes. Even though nine out of ten dollars are still spent in physical outlets, consumers’ choices are shifting toward those that better integrate their online shopping with in-store visits.
This trend signals the end of managing multiple sales channels, a practice commonly called ‘omnichannel’, which uses data analytics to cross-reference customer transactions at different contact points. The evolution is toward a more streamlined model of unified commerce.
What is Unified Commerce?
Gartner defines unified retail commerce as:
To unify all modes of shopping into easier, more effective and enjoyable experience, traditional retailers will need to master the many ways shoppers use technology. This translates into a unified distribution system across e-commerce and brick-and-mortar channels. A recent survey of 205 USA retailers indicated a significant shift toward integration of retail, wholesale and e-commerce distribution .
For traditional retailers, the middle and back office problems are solved, or at least well on the way. Significant progress is being made to integrate supply chain, logistics, order fulfillment and payment systems.
The last step and missing link to unified commerce is in the front office: giving customers a unified view of the retailer’s business: an easy and consistent way to shop no matter where it happens. This is how online will capture offline.
Digital Native Vertical Brands
It becomes even more relevant as Digital Native Vertical Brands (DNVBs) are making inroads into brick-and-mortar. These companies were born on the internet, and enjoyed rapid growth. However, realising that their future prosperity depends on physical presence with their customers, these originally pureplay e-commerce businesses are now opening retail stores.
DNVBs is largely an overseas phenomenon led by companies such as Warby Parker (optical) and Casper (bedding). In Australia, companies such as Cue Clothing implement strategies of “buy anywhere, fill anywhere” making the online connection anywhere fundamental to business.
How do I know it is unified commerce?
The main elements of a unified retail business as seen by the customer are :
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Parousya was created to provide technology that automatically connects a customer to a business in a physical space in order to unify the online with the offline and open up a world of opportunities